Board endorses direction of reorganized GM

By IBT Staff Reporter On 08/04/09 AT 8:40 PM

The board of General Motors Co endorsed the automaker's direction and the focus of management after the first meeting of directors since GM emerged from a U.S. government-financed bankruptcy last month.

A statement by the 13-member board issued on Tuesday capped a two-day meeting in Detroit where directors reviewed future product plans and discussed key decisions still facing GM, including the sale of its Opel brand.

With a clean balance sheet, a streamlined and stronger dealer network, and a flatter and more focused organizational structure, the new GM is well poised to return to viability and compete in the global market, directors said in a statement issued by GM.

The entire board came away extremely impressed with the product lineup, and we are determined to act fast and drive the actions necessary to guide the new GM to success, the statement said.

GM Chief Executive Fritz Henderson won the backing of the board in its first meeting under the leadership of Chairman Ed Whitacre, a person familiar with the proceedings said.

Henderson took the top job at the automaker in March when his predecessor Rick Wagoner stepped down at the request of the Obama administration.

Henderson, who has pledged to revamp the automaker's much-criticized culture and slow decision-making, stressed in a presentation to directors that he served at the pleasure of the board, according to the person who could not be quoted about the private deliberations.

The focus at the newly launched General Motors Company is squarely where it should be, on customers, products and the development of a winning culture, the board said.

Whitacre, the former chief executive officer of AT&T Inc , was one of 10 appointees to the reorganized board supported by the U.S. Treasury.

TEST DRIVES, NO OPEL DECISION

GM emerged from bankruptcy on July 10 in a bankruptcy transaction financed by the U.S. Treasury. The U.S. government owns 60.8 percent of the largest U.S. automaker and has committed to an initial public offering as soon as next year.

In the statement, GM said board members had driven upcoming models including the Cadillac SRX, the GMC Terrain and the electric-powered Chevrolet Volt and reviewed plans for Chevy, Cadillac, Buick and GMC.

Those are the four brands that will remain once the top U.S. automaker completes its sale of Saturn, Saab, Hummer and its European operations centered on Opel.

The board was briefed on the negotiations for the sale of Opel but made no recommendation on how to proceed, GM said.

Canadian auto parts group Magna and Belgium-based financial investor RHJ are locked in a takeover battle over Opel.

GM is aiming to give up control of Opel in return for German government financial support for Opel.

Germany prefers the Magna offer since it would preserve more jobs. GM has indicated it favors RHJ's bid.

Six members of GM's former board remain on the reorganized slate of directors, including Henderson.

New members appointed by the U.S. government include two directors with private equity experience: TPG Capital founder David Bonderman and David Akerson, managing director of The Carlyle Group.

In addition, Stephen Girsky, a former Wall Street analyst and GM adviser, was named to represent the interests of the United Auto Workers union.

A UAW-affiliated trust holds 17.5 percent of the new GM. The governments of Canada and Ontario own 11.7 percent.

The remaining 10 percent is held by Motors Liquidation Co , which represents the parts of the automaker that remain in bankruptcy, to pay off unsecured creditors.

The automaker has replaced two senior leadership forums with one smaller executive committee led by Henderson and is cutting its executive ranks by 35 percent.